Federal Court Rejects “Illegality Defense” in Cannabis Trademark Case – Canna Law Blog™

The artistic protection that failed

A trademark infringement defendant argued it couldn’t be sued in federal courtroom as a result of its hashish enterprise was engaged in criminality below federal regulation. This seemingly intelligent technique fell flat in Colorado federal courtroom, representing the most recent resolution in a rising pattern of federal judges retaining cannabis-related litigation regardless of the centuries-old precept that courts lack jurisdiction over civil disputes involving unlawful conduct.

The choice confirms that corporations acquiring federal trademark registrations in “cannabis-adjacent” companies are possible to achieve defending these marks in opposition to rivals working with out registrations—most actually because they’re instantly concerned in hashish commerce fairly than merely adjoining to it.

The illegality doctrine and hashish commerce

The illegality doctrine prohibits courts from offering a discussion board or granting cures to events who’re breaking the regulation. The earliest reported software of the doctrine ex turpi causa is the 1725 case of Everett v. Williams, higher often known as The Highwayman’s Case, during which an English courtroom dismissed a dispute between two thieves over division of theft proceeds—after which turned each litigants over to the sheriff.

Within the hashish context, this doctrine has created vital limitations. Federal courts have traditionally dismissed cannabis-related business disputes, forcing litigants into state courtroom techniques. The problem is compounded by federal trademark coverage: the Patent and Trademark Workplace refuses trademark registrations for federally unlawful items and companies, successfully excluding hashish companies from federal trademark safety for merchandise with psychoactive quantities of THC.

Regardless of these limitations, federal judges are more and more prepared to retain cannabis-related instances, representing a realistic recognition of the complicated authorized panorama the place state legalization conflicts with federal prohibition.

Case evaluation: BBK Tobacco & Meals v. J&C Corp.

In BBK Tobacco & Meals LLP v. J&C Corp., U.S. Dist. Ct. Colo. Case No. 24-cv-01466 (Aug. 26, 2025), the defendant operated a hashish enterprise utilizing the marks “Juicy” and “Uncooked” for THC-containing merchandise. The plaintiff held federal trademark registrations for an identical marks used on hemp rolling papers.

The defendant’s technique

The defendant’s argument was artistic: since federal regulation prohibits trademark safety for unlawful enterprise actions, and for the reason that plaintiff couldn’t get hold of registered trademark safety for THC-related items, any infringement declare should fail as a matter of regulation. The defendant basically argued that permitting the declare would improperly increase the plaintiff’s rights past what federal trademark regulation permits.

The courtroom’s response

The federal decide made fast work of this protection, specializing in conventional trademark infringement evaluation. First, the courtroom famous that lots of defendant’s merchandise utilizing the contested marks weren’t federally prohibited: smoking paraphernalia stays authorized no matter supposed use.

Extra importantly, the courtroom utilized normal “probability of confusion” evaluation. The decide emphasised: “Each corporations right here promote and market merchandise on the smoking fringe between marijuana and tobacco and merchandise which may simply and possibly do cross over and again.” This overlap creates substantial probability of client confusion, significantly as a result of shoppers wouldn’t train nice care when buying these merchandise.

Strategic implications

This resolution has vital implications for companies within the hashish ecosystem. Firms with federal trademark registrations for cannabis-adjacent merchandise—hemp items, smoking equipment, life-style manufacturers—now have stronger grounds to guard these marks in opposition to direct hashish rivals.

The choice suggests federal courts will look past strict illegality and deal with conventional trademark rules when marks and markets overlap considerably. This gives useful safety for companies which have invested in constructing federally protected manufacturers in markets adjoining to federally unlawful hashish, comparable to hemp merchandise.

Trying ahead

This resolution represents one other step within the evolving panorama of cannabis-related federal litigation. Though the BBK resolution is on the district courtroom stage, and doesn’t bind different federal courts, it displays a pattern the place judges usually are not reflexively dismissing civil claims involving hashish—even the place the treatment sought by the plaintiff includes restoration of cash damages derived from federally unlawful conduct.

Federal judges have acknowledged in plenty of latest selections the sensible actuality that medicinal or leisure marijuana is now allowed below state regulation in 34 states, and that the federal authorities is just not actively imposing the Managed Substances Act (“CSA”) referring to hashish. However the courts stay constrained by the CSA’s absolute prohibition on possession, manufacturing and distribution of high-THC hashish, and the Act’s declaration that there is no such thing as a property proper to cash given in “change for a managed substance.” This has induced federal chapter judges to disclaim many petitioners within the hashish business safety below the Chapter Act. But when some side of a civil dispute includes federally authorized conduct, or insolvency consists of no less than some funds or belongings which can be arguably untainted by violation of the CSA, the doorways to the federal courthouse usually tend to be unlocked as we speak than just some years in the past.

Timothy L. Alger is a litigator and of counsel at Harris Sliwoski LLP, and serves as an arbitrator and mediator by his ADR apply, Alger Resolutions. https://algeradr.com/